Fed up with nasty contract battles between health insurers and hospitals, employers are beginning to show their muscle when it comes to providing the health coverage their employees want.
Since finding himself caught in the middle of heated negotiations between Blue Cross Blue Shield of Georgia and Piedmont Healthcare, John Wieland, CEO of John Wieland Homes & Neighborhoods Inc., has been forced to wait out a decision that could cost his 1,100 employees, many of whom live south of the city and use Piedmont Fayette Hospital.
On July 1, contracts allowing Piedmont to care for patients covered by Blue Cross insurance expired as negotiations between the warring parties reached a stalemate over rates Piedmont charges for its medical services and what Blue Cross will pay. For patients and Blue Cross members, that could mean having to switch medical providers.
Wieland, who is a member of Piedmont's foundation board and a Piedmont patient, has been a loyal customer of Blue Cross, relying on the insurer for the past 30 years.
"I'm very torn in this situation," said Wieland, who paid more out-of-pocket costs to see his doctor last week. "We've had a really superior relationship with both of them, that's why I want to knock their heads together and get them to solve this."
Wieland is waiting it out and counting on "two very intelligent CEOs" to reach a compromise, he said.
But some employers are making changes in their health-care plans.
Fayette County, which has about 1,200 employees and their families covered by the county's health insurance plan, switched from Blue Cross to CIGNA the day the contentious contract expired.
King & Spalding LLP, Atlanta's largest law firm, is in the process of adding an insurance plan from CIGNA Corp. (NYSE: CI) so that employees who depend on Piedmont can continue using the provider at in-network rates.
"It would be a Band-Aid for our current situation," said Jon R. Harris Jr., a King & Spalding partner who chairs the firm's insurance committee.
Harris says when the firm puts its insurance business out to bid for 2007, it will re-evaluate the situation.
"If a carrier does not have Piedmont, and the Piedmont physicians, that would be a significant factor in our decision," said Harris, whose firm represents Piedmont Hospital.
Meanwhile, since the contract expired, Piedmont has reached out to some of Atlanta's biggest employers, such as BellSouth Corp. and The Coca-Cola Co. to suggest the option of directly contracting with Piedmont.
Direct contracting, which would only work for large, self-insured companies, means that employers would set up a contract directly with Piedmont Healthcare that would specify the costs and benefits provided. The employer would have to hire a third-party administrator or pay an insurance company like Blue Cross to administer it.
Coca-Cola was among those companies contacted about direct contracting. However, the company, which offers employees several different insurance plans, does not have many employees in the Atlanta area who use Blue Cross, said spokesperson Kirsten Witt.
BellSouth was also contacted, but the company would not comment on the matter.
But some insurance experts caution that direct contracting is complicated.
"It is absolutely a viable option," said Guy Morrison, president and CEO of Strategic Benefits Solutions Inc. "But the concern for the employer should be that the cost of services could be higher under that compared to what it was under the Blue Cross agreement. Can an employer with 2,000 employees negotiate directly with Piedmont as effectively as Blue Cross could negotiate on behalf of their 3 million members in Georgia?"
For now, most employers seem to be hoping the situation will be resolved by Blue Cross and Piedmont.
But both sides have firm positions.
"We've got a responsibility and we would be remiss if we just kept paying the cost of things and didn't think about the overall costs of health care to our members," said Caz Matthews, president of Blue Cross Blue Shield of Georgia. "If we had conceded to the rates they requested from us it wouldn't just impact what we pay at Piedmont, it would also create the opportunity to drive up costs for the entire metro Atlanta marketplace."
But Piedmont officials say they have made reasonable offers to Blue Cross, and they feel that patients are being treated unfairly.
"We have deals with all the other insurance companies at the same rates and the same terms. All the things that [Blue Cross] is offering are lower," said Tim Stack, president and CEO of Piedmont Healthcare. "If you bought insurance with Piedmont being in the network and now all the sudden you lose 492 doctors and your hospital from the network, we think that's wrong -- you have definitely been duped."
But many employers say they are happy to stick with Blue Cross.
Patty Warren, director of human resources for Atlanta-based Ronald Blue & Co., says her company's health costs continue to escalate. The financial services firm, which has about 230 employees, has tried several different approaches to keeping costs down.
"I'm very much in support of what Blue Cross is doing to try to contain the costs," said Warren. "I'm very much in favor of Blue Cross going to the mat on this one because if Piedmont gets this one, everyone else will want those increases, too."
Employer options
Employers face tough decisions amid Blue Cross-Piedmont battle.
Direct contracting -- Large employers could sign a new health-care contract directly with Piedmont. They would have to pay an insurance company or other administrator to manage the arrangement.
Switching insurers -- Some employers are considering changing carriers or adding a new carrier to help employees continue using Piedmont. Others may switch when their contract ends for the year.
Sticking it out -- Many companies are waiting to see if the two sides can reach a compromise.
Source: Staff research
